NBC might be losing $200 million on the Vancouver Winter Olympics to be held next month -- but there are many reasons why the games still yield positive results.
NBC affiliates -- already grumbling about travails in prime-time and late-night programming -- will see significant increases in ratings and advertising sales. Plus, NBC and its stations still get a big marketing umbrella effect for its other programming.
"There is still an overall value to it," says Brad Adgate, senior vice president and corporate media director of media agency Horizon Media -- "something you can't always quantify."
Adgate estimates NBC will get around a Nielsen 14 average household rating, which will be "higher than in 2006 (Torino, Italy), but lower than 2002 (Salt Lake City)."
The 2006 Torino games averaged a 12.1 household rating and an 18-49 average rating of 6.1. The 2002 Salt Lake games were at a 19.2 household rating and an 11.1 rating among adult 18-49 viewers. NBC typically sees viewership gains for its Olympic programming when events are in North American time zones, allowing for more live programming.
Prime-time ad rates continue to grow -- $600,000 in the 2002 Winter Games; $700,000 in 2006. Its estimated prime-time 30-second unit costs will peak at $750,000 to $800,000, especially for the marquee ice skating events, even in the midst of a recessionary economy.
Although the economics may be changing for TV networks, TV executives still love Olympics programming -- it levels a blow at the competition. Broadcast rivals witness much lower ratings, as do cable networks.
To many programming observers, the Olympics -- along with other big events such as the Super Bowl and the Oscars -- can temporarily reverse the tide of broadcast erosion. In the last two Winter Olympics, for example, ad-supported cable has seen drops in collective ratings and shares.
From September 2005 to February 2006, for example, household viewing data for ad-supported cable networks was at a Nielsen 33.4 rating/54 share, and an 18-49 average 15.9 rating. During the Olympics, in late February 2006, those numbers dropped to a 30.6 household rating/48 share and an 18-49 average 14.5 rating.
TV programmers are then lured by the "lightning in the bottle" effect that NBC's Beijing Summer Games had in 2008. Those games witnessed surprising ratings growth over previous summer games -- 214 million overall viewers for the entire event -- setting a new record previously held by the Atlanta games in 1996, which came in at 209 million.
The Beijing Games took in a 16.2 average household rating, a 9.3 adults 18-49 rating and 27.7 million overall viewers.
But increasingly, all Olympics rights fees have climbed, regardless of ratings fluctuations. Salt Lake City cost NBC $545 million; Turin was $613 million; and Vancouver, $820 million.
According to a number of reports, NBC has pulled in a little more than $650 million in advertising sales for the Vancouver event, which has had NBC and parent General Electric executives citing losses of some $200 million.